Sebastian Andreescu

Sebastian Andreescu

Sebastian Andreescu, CEO of FinTech company Billhop, discusses how paying suppliers by cards helps corporations eliminate the need for supplier onboarding

Who is Billhop?

We are a payment service enabling businesses to manage supplier payments by card on a global basis. Businesses can instantly pay any supplier by card, regardless of whether the supplier accepts cards. This effectively eliminates the need for supplier onboarding as suppliers do not have to be onboarded onto a corporation’s Enterprise Resource Planning (ERP) system to be paid. Billhop caters to predominantly mid-capitalisation and large-capitalisation enterprise clients.

What are the main issues around supplier payments?

Supplier payments for enterprise clients are usually divided into direct spend and indirect spend.

Direct spend normally represents the lion’s share of a company’s spend, but is often concentrated around a few strategic suppliers, who tend to use this as negotiation leverage, to ensure swifter payments terms. 

This can lead buyers to have low Days Payable Outstanding, which means a significant amount of working capital is tied up in inventory.  

Indirect spend tends to be ad hoc and/or low-value payments spread across many suppliers. 

Enterprises are required to onboard suppliers to their enterprise resource planning (ERP) system and follow the same procure-to-pay process as their direct spend. 

This often leads to a situation where the cost of manpower spent onboarding indirect-spend suppliers to their ERP system is higher than the actual invoice they are trying to pay, as the ERP onboarding process is rigorous and time consuming.

How does your solution help?

The challenge for businesses with suppliers is that the vast majority of suppliers do not accept card payments. Billhop solves this by enabling them to use their cards as the preferred method for managing supplier payments, whether it is to optimise cash flow or to enhance process efficiency. 

On direct spend, together with commercial issuers, we offer enterprise clients a cost-efficient solution to manage their cash flow. 

Commercial issuers offer bespoke card-products with prolonged interest-free payments terms, and with significantly extended credit lines of up to hundreds of millions of euros.

Using Billhop, organisations can pay all suppliers, even when the suppliers do not accept card payments – something that is true for the vast majority of B2B suppliers. 

The fees that are involved in using card rails are often offset by the early-pay discounts that suppliers offer our enterprise clients as an incentive to getting paid faster. 

For instance, Enterprise A will typically pay Supplier B after 60 days. Supplier B offers a 2% early-pay discount if Enterprise A pays after 10 days. 

Using Billhop, Enterprise A pays Supplier B after 10 days with the bespoke card they have received from their commercial bank, which has a 90-day interest-free payment period. The fee that is incurred for the card transaction – including Billhop’s margin – is lower than the 2% discount offered by the supplier. 

The enterprise client has effectively extended their DPO from 60 days to 100 days, paid their suppliers on time, and fully offset the cost of paying by card. (Note: These figures are purely illustrative).

How does Billhop help with the supplier onboarding challenge? 

Supplier onboarding is a pain point when it comes to indirect or tail spend management. 

As companies continue to scale and grow, they inevitably accumulate more and more indirect suppliers that need to be onboarded onto the ERP system to get paid. 

Payments to indirect suppliers are frequently given lower priority compared to their direct spend counterparts, given their ad-hoc and low-value nature.

In fact, studies have shown that it can take large enterprises up to six months to onboard a single supplier. It makes very little business sense to onboard a supplier that you’re only going to pay once. 

Billhop addresses this by offering process efficiency in indirect spend management. 

Enterprise clients can use their existing procurement cards  – predominantly used for travel and entertainment – to pay indirect suppliers and treat them as ordinary expense items. 

This way, they get all the necessary reconciliation data on card rails, which flow directly into their expense management system, in the same way as when they pay for hotel accommodation, for example. 

By paying all tail spend suppliers with a card, our clients do not have to go through the costly and time-consuming process of onboarding these suppliers to their ERP system.

This comes with significant cost savings, without having to compromise on governance and data. 

Share

Featured Interviews

Featured

Cindy Perettie

Executive Vice President and Global Head of Kite

Bringing Business and Global Health, Cindy Perettie, Executive VP of Kite, Shares a Journey of Science and Business to Provide World-class Treatment

Read More

Tiemen Meester

DP World Chief Operating Officer

As Supply Chains Lurch from Crisis to Crisis, DP World Chief Operating Officer Tiemen Meester Discusses How He Manages to Keep Things on an Even Keel

Read More
The biggest subject right now is outside of the physical movement of goods is decarbonisation.
Tiemen Meester
DP World Chief Operating Officer

Yury Gomez

Global Chief Commercial Leader of Process Industries for Microsoft

Yury Gomez, Global Chief Commercial Leader of Process Industries for Microsoft, on why people are at the heart of all she does

Read More

Dr. Garr Chau

Supply chain and strategic planning manager at TotalEnergies

TotalEnergies’ Garr Chau, supply chain and strategic planning manager & Rick Ashton, Market Development Manager, on the road to sustainable solutions

Read More

Brendan O’Toole

VP of Procurement at Nutrabolt

Nutrabolt’s VP of Procurement shares his storied career, as well as the motivations and inspirations that keep him going day-to-day

Read More

Cindy Perettie

Executive Vice President and Global Head of Kite

Bringing Business and Global Health, Cindy Perettie, Executive VP of Kite, Shares a Journey of Science and Business to Provide World-class Treatment

Read More